Living On One Income
It really is possible for most people to live on just one income, you just have to be smart about it. You will have to be careful with your expenses and make cuts wherever you can. If you have recently had two incomes, this may be tough for you, but you can do it.
Take a look at some ways to slash your expenses and get your budget in order.
1) Do More Yourself
If you have been used to having two incomes, you have probably become accustomed to paying people to do some of the little things around the home. Money has never been the problem, the problem was always time. That is now reversed and time is not the problem, the problem is money.
Take your extra time and use it to save. If you have been paying for a maid, end your contract. If you have a landscape company cut the lawn, get a lawn mower and start doing it yourself. Make the most of your free time and you can potentially save hundreds of dollars a month.
2) Cut Your Food Budget
This is another area where time was probably costing you a lot of money each month. Prepared meals fast food and restaurants all cost a lot of money. In addition, you were likely accustomed to shopping at grocery stores without a plan and purchasing dozens of items or more that simply went to waste.
Now that time is not a factor, you can make some big cuts to that food budget. This will mean cooking most, if not all of your meals and meal planning.
Meal planning is essential to stopping food wastage and is a very simple practice. Simply plan out all of the meals for a week and write down the ingredients that you need to make them. Then, check the pantry and see what you have. Mark those items off the list and buy what you need at your weekly grocery trip.
The practice of meal planning has a number of advantages. The chief one is that it allows you to buy just what you need with little to no waste. In addition, since you will be buying everything you need, it eliminates those pesky unexpected trips to the store. Those trips for one or two items always end up with you buying other things that you did not need.
If you want to really make the most of your meal planning, base your meals on four cheap staples. Rice, potatoes, pasta and beans. These 4 ingredients can be served for pennies a serving.
3.) Entertain Yourself In New Ways
Entertainment expenses can get out of hand in a hurry and you will need to start reeling them in right away.
The biggest offender in this category is cable/satellite. If you still have this service, cut it out and save 100 or even as much as 200 dollars a month. Replace it with an inexpensive service like Hulu or even a free streaming service like Crackle.
As far as entertainment out goes, you should try to eliminate it or cut back as much as possible. Thanks to Covid, that is not really a big issue, but once things start to re-open, you will have to make some changes.
If you like to go to sports events, find a minor league team to follow. Replace MLB games with a Minor League Team. Replace NFL games with arena football. There are a lot of alternative teams out there that are much cheaper and will appreciate your support.
Movies can easily be replaced by digital rentals. You will have to wait a few more weeks to watch them, but you will eventually get on a cycle where there is always something coming out you have not seen.
In general, take every entertainment expense you have and find a cheaper alternative. Be creative.
4) Cut Vehicle Expenses
If you are financing two vehicles, you are probably placing quite a burden on your budget. Since one of you will not be driving as much, changes should be considered here.
The easiest place to look is at your auto insurance. If it has been some time since you have shopped it, then this could yield you some good savings. With only one person working, your mileage driven has probably dropped significantly. Many insurers will offer discounts for this. If yours does not, find one. Get at least 3 quotes on auto insurance with your reduced mileage.
Another option is to consider a vehicle downgrade. With reduced miles driven comes the possibility of purchasing an older and higher mileage vehicle. If you were driving 20,000 miles a year and now will be driving 2,000, you can see that the risk is minimal and the potential savings on your monthly payment is huge.
Finally, consider eliminating one vehicle completely. If you are financing your vehicles, you could simply trade both in on a single one. This would cut your auto loan payments and would also lower your auto insurance and maintenance costs.
5) Pay Off Your Credit Cards
I know, how are you going to pay off your credit cards with one income.
It is possible, but you have to have a plan and that plan depends on your personality.
If you are a logical person, take all of your cards and organize them by interest rate. Pay the minimum on all cards except for the highest interest card. Pay as much as you can on this card until it is paid off, then move to the next highest interest card. This will allow you to make the most of your money, eliminating the highest interest first.
If you are an emotional person, take all of your cards and organize them by balance. Pay the minimum on all of the cards except for the lowest balance. Pay as much as you can on that card until is is paid off and then move to the next lowest balance. This will give you the reward of paying off a credit card faster and will keep you motivated.
Another option, if you have the credit, is to get a consolidation loan. If you could cut your interest rate in half or less, this would make a huge difference. It might reduce both the interest paid and your monthly total payment.
6) Lower Utility Bills
One of you will be home more, so your utility bills will go up, right? Not necessarily if you take some step to reduce them.
The biggest culprit is going to be heating and cooling costs. You can fix this by turning your heat down a few degrees in the winter and up a few degrees in the summer. Make up for the temperature difference by dressing appropriately and using ceiling fans. You will be surprised at just how much you will get used to the new normal temperature and how much you save.
Once you have the HVAC under control you can turn to the next biggest utility waster, the hot water heater. Most are set entirely too hot. The EPA recommends setting the temperature at 120 degrees to prevent burns and save money. OSHA suggests setting it at 140 degrees to kill the most bacteria. In a residential setting, a happy medium of 130 degrees should work for most. It will save you money and still kill most bacteria.
Finally, turn to all of the little things and believe me, they add up. Make sure their are no air gaps in windows and doors. New seals are cheap and will pay for themselves fast. Keep lights turned off and when it is time to replace bulbs, replace them with LED versions.
If you want to really get those utility bills down, it takes a lot of small steps but they really add up especially if you will be in your home for more of the day.
7) Add Some Income
Just because you no longer have a regular job does not mean that you can not make a little extra money on the side.
Working from home is possible, even if you have kids to take care of. Do a gig on Fiverr, watch dogs at your house or even do some surveys. You might not be able to replace your full time income, but every dollar counts when you are making the transition from a two income family to a single income one.